You have to provide financial advice to a client who wishes to apply for a mortgage loan.
Question:
You have to provide financial advice to a client who wishes to apply for a mortgage loan. He wants to buy an apartment with a value of UF 2500. She has the option of applying for credit at two banks. Banco Alpha offers an effective annual interest rate of 3.9% for a 20-year term. Beta Bank offers you an effective annual interest rate of 4.1% for a 30-year term. Both banks finance a maximum of 80% of the value of the property. Your client earns a monthly salary equivalent to UF 44. The policy in both banks is that, to pre-approve the loan, the dividend to be paid must correspond to a maximum of 25% of the monthly salary. Calculate for each alternative the respective nominal annual rate, the monthly dividend and the total interest you would pay. Finally, which bank would you suggest to your client? Explain in detail the reason for your decision.
Essentials Of Business Statistics Communicating With Numbers
ISBN: 9780078020544
1st Edition
Authors: Sanjiv Jaggia, Alison Kelly